Mayfair Co. allows select customers to make purchases on credit. Its other custo
ID: 2469063 • Letter: M
Question
Mayfair Co. allows select customers to make purchases on credit. Its other customers can use either of two credit cards: Zisa or Access. Zisa deducts a 5.0% service charge for sales on its credit card and credits the bank account of Mayfair immediately when credit card receipts are deposited. Mayfair deposits the Zisa credit card receipts each business day. When customers use Access credit cards, Mayfair accumulates the receipts for several days before submitting them to Access for payment. Access deducts a 4.0% service charge and usually pays within one week of being billed. Mayfair completes the following transactions in June. (The terms of all credit sales are 2/15, n/30, and all sales are recorded at the gross price.) June 4 Sold $700 of merchandise (that had cost $350) on credit to Natara Morris. 5 Sold $9,900 of merchandise (that had cost $4,950) to customers who used their Zisa cards. 6 Sold $6,090 of merchandise (that had cost $3,045) to customers who used their Access cards. 8 Sold $4,900 of merchandise (that had cost $2,450) to customers who used their Access cards. 10 Submitted Access card receipts accumulated since June 6 to the credit card company for payment. 13 Wrote off the account of Abigail McKee against the Allowance for Doubtful Accounts. The $462 balance in McKee’s account stemmed from a credit sale in October of last year. 17 Received the amount due from Access. 18 Received Morris’s check in full payment for the purchase of June 4. Required: Prepare journal entries to record the preceding transactions and events. (The company uses the perpetual inventory system.)
Explanation / Answer
Journal Entries:
Date Accounts Titles and explanation Debit $ Credit $ June 4 Acounts Receivable 700 Sales revenue 700 Cost of Goods sold 350 Finished Goods inventory 350 June 5 Acounts Receivable 9900 Sales revenue 9900 Cost of Goods sold 4950 Finished Goods inventory 4950 Cash 9405 Card Service charge 495 Accounts Receivable 9900 June 6 Accounts Receivable 6090 Sales revenue 6090 Accounts Receivable 3045 Finished Goods inventory 3045 June 8 Accounts Receivable 4900 Sales revenue 4900 Accounts Receivable 2450 Finished Goods inventory 2450 June 10 Access Cards 10990 Accounts Receivable 10990 June 13 Allowance for Doubtful Accounts 462 Accounts Receivable 462 June 17 Cash 10550.40 Card Service charge 439.60 Access Cards 10990 June 18 Cash 700 Accounts Receivable 700